Section 147

Section 147 — the law in short

What the courts have decided on section 147, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.

• Sanand Properties P Ltd v Jt CIT Supreme CourtHelps department
  My company is a member of an AOP and takes 35% of the AOP's gross sale proceeds under the AOP deed. We showed it as an exempt share of the AOP's profit. After a survey the AO reopened two years and now says it is revenue. Can he reopen, and is the money taxable in my hands?
  No on the reopening challenge and no on the exemption. Where the assessment order shows the Assessing Officer never applied his mind to the character of the receipt at all, there is no opinion to change, and material coming out of a s.133A survey that reveals the true nature of the receipt is tangible material for s.147. On the merits the Court read Clause 7 of the AOP deed itself and held that a member's entitlement to 35% of gross sale proceeds, taken upfront and untouched by the AOP's expenses, is not a share of profit but a diversion of the AOP's receipts by overriding title, taxable in the member's hands as a business receipt. Two Revenue appeals were allowed and the assessee's appeal dismissed.
• Union of India v Rajeev Bansal Supreme CourtCuts both ways
  Your notice was issued in the 1 April to 30 June 2021 window. Was it saved by TOLA, or is it dead?
  Saved, but only within limits. TOLA extends the time limit for issuing the reassessment notice and for the sanction under s.151. It does not extend anything else, and every other defence survives — including the surviving-period computation for your own assessment year.
• Mangalam Publications v CIT Supreme CourtHelps taxpayer
  You filed without books because they were seized. Is that a failure to disclose?
  Not where the primary facts were disclosed some other way. The duty to disclose does not extend beyond primary facts; once they are disclosed, the burden shifts to the officer to draw the right inferences. The reassessments were quashed.
• Dy. CIT v U.K. Paints (Overseas) Ltd Supreme CourtHelps taxpayer
  A section 153C assessment was made on me after a search on someone else, but nothing incriminating about me was found. Does the Abhisar Buildwell rule protect me too?
  Yes. The Supreme Court dismissed a batch of Revenue appeals, holding that where no incriminating material was found during the search — either from the assessee or from the third party — the assessments under section 153C were rightly set aside by the High Court. The Court declined to interfere with those judgments. It did, however, record on the Revenue's request, made on the strength of Abhisar Buildwell, that it remains open to the Revenue to initiate reassessment proceedings under sections 147 and 148 in accordance with law, if that is permissible under the law.
• PCIT v Abhisar Buildwell P Ltd Supreme CourtCuts both ways
  Search assessment for a year already completed, but nothing incriminating was found. Can the officer still add?
  No — not under s.153A. For completed or unabated assessments the addition must rest on incriminating material found in the search. But the Court preserved the department's power to reopen those years under ss.147 and 148 instead.
• Mansarovar Commercial P Ltd v CIT Supreme CourtHelps department
  My company is registered outside the taxable territory but run from Delhi. Where is it resident?
  Where it is actually run. The Supreme Court held that the residence of a company turns on de facto control and management, not on the place of registration: five companies incorporated under the Registration of Companies (Sikkim) Act, 1961 were resident in India because the management and control of all five was wholly situated in Delhi, at the office of a chartered accountant. The appeals were dismissed and the Delhi High Court's decision affirmed.
• CIT v Mansukh Dyeing and Printing Mills Supreme CourtHelps departmentSuperseded by amendment
  The firm revalued its land and credited the surplus to the partners' capital accounts. Is that taxable?
  Under the old s.45(4), yes. The Supreme Court held that crediting a revaluation surplus to partners' capital accounts on a reconstitution is in effect a distribution of the assets to the partners and a transfer chargeable to capital gains, because the enhanced balances were immediately available for withdrawal — and two partners did withdraw.
• Union of India v Ashish Agarwal Supreme CourtHelps department
  What happened to the thousands of s.148 notices issued under the old rules after the law changed in 2021?
  Reported as treating those notices as s.148A(b) show-cause notices instead of quashing them, with directions on how they were to proceed.
• Dy. CIT v M.R. Shah Logistics Pvt Ltd Supreme CourtHelps department
  Another company declared the cash it put into my share capital under the Income Declaration Scheme. Does that stop the Department reopening my assessment on the same share money?
  No. The Supreme Court set aside the Gujarat High Court's order quashing a section 148 notice and allowed the assessing officer to complete the reassessment. The immunity in section 192 of the Finance Act 2016 runs to the declarant alone and only for limited purposes; a declaration by Garg Logistics could not immunise the assessee, a non-declarant. The reopening was in any case based on material seized in the search on an accommodation entry provider and correlated with the assessee's Registrar of Companies filings, not on the declaration. Where there is objective tangible material, the sufficiency of that material cannot dictate the validity of the notice.
• New Delhi Television Ltd v DCIT Supreme CourtCuts both ways
  Reopening beyond four years — how much are you actually required to have disclosed?
  The primary facts, and no more. Disclosure of secondary facts is not required. But if the department wants to use an extended limitation window, it must say so in the notice or the reasons.
• ITO v TechSpan India (P) Ltd Supreme CourtHelps taxpayer
  What actually counts as a 'change of opinion'?
  Formulating an opinion and then changing it. To constitute a change of opinion the earlier assessment must, expressly or by necessary implication, have expressed a view on the subject now being reopened.
• CIT v S. Goyanka Lime & Chemical Ltd Supreme CourtHelps taxpayer
  Is 'Yes, I am satisfied' enough for the sanctioning authority to write?
  No. Recorded that way, the satisfaction is mechanical and shows no sign that the officer's reasons were examined. The s.148 notices were held unsustainable and the department's SLP was dismissed.
• Dy CIT v Zuari Estate Development & Investment Co Ltd Supreme CourtHelps department
  My return was only processed under section 143(1) and now the officer wants to reopen it. Can I say he is changing his opinion?
  No. The Supreme Court held that where a return is accepted under section 143(1), no assessment order is made and no opinion is formed, so the change of opinion objection simply does not arise. The point was held to be squarely covered by Rajesh Jhaveri Stock Brokers. The Bombay High Court had quashed the reopening notice without addressing this contention at all, and its judgment was set aside. The Tribunal's order, which had merely followed the High Court, went with it, and the appeal was remitted to the Tribunal to be decided on merits.
• CIT v Chhabil Dass Agarwal Supreme CourtHelps department
  Can I go straight to the High Court against an income-tax order instead of filing the statutory appeal?
  Ordinarily no. The Supreme Court held that the Income-tax Act supplies a complete machinery for assessment and reassessment, and an assessee cannot abandon that machinery and invoke Article 226. The exceptions are narrow and have to be pleaded and made out — an order passed otherwise than in accordance with the enactment, in defiance of fundamental principles of judicial procedure, under repealed provisions, or in total violation of natural justice.
• ACIT v Dhariya Construction Co Supreme CourtHelps taxpayer
  The only thing behind my reopening notice is the Valuation Officer's report. Is that enough?
  No. The Supreme Court held that the opinion of the Valuation Officer is not by itself information on which an assessment can be reopened. The officer has to apply his mind to whatever material he has collected and form his own belief; adopting the valuer's figure is not that.
• CIT v Kelvinator of India Ltd Supreme CourtHelps taxpayer
  The officer looked at this exact issue in the original assessment and now wants to look again. Can he?
  No. Reopening needs tangible material. A mere change of opinion is not a ground, and where a s.143(3) assessment was made the officer is presumed to have applied his mind — so re-examining the same material is review, which the Act does not permit.
• CIT v Greenworld Corporation Supreme CourtCuts both waysValidity unconfirmed
  The Assessing Officer passed the assessment after being told what to do by the Commissioner. What happens to that assessment, and to a later section 263 order on it?
  An assessment passed on the dictates of a higher authority is without jurisdiction and a nullity. And a Commissioner exercising section 263 cannot use that order to direct reopening of other assessment years; his revisional jurisdiction is confined to the year before him.
• CIT v Alagendran Finance Ltd Supreme CourtHelps taxpayer
  A reassessment was done in between. Does the two-year clock for s.263 restart from it?
  Not for an item the reassessment never touched. For that item, limitation runs from the ORIGINAL assessment order, because the doctrine of merger does not apply where the subject matter is different.
• ACIT v Rajesh Jhaveri Stock Brokers P Ltd Supreme CourtHelps department
  My return was only processed under 143(1). Does that stop the department reopening it later?
  No. An intimation under s.143(1) is not an assessment, so it does not bar the officer from later starting reassessment proceedings.
• Raymond Woollen Mills Ltd v ITO Supreme CourtHelps department
  The department says the court will not look at whether its reasons are any good. Is that really the test at the reopening stage?
  Largely yes. When the validity of the initiation of reassessment is under challenge, the court asks only whether there was prima facie some material on which the department could reopen. Whether that material is sufficient or correct is not examined at that stage; it is argued in the reassessment. The appeals were dismissed and the reopening was upheld.
• CIT v Nirbheram Daluram Supreme CourtHelps department
  The first appellate authority has enhanced my assessment using items the Assessing Officer never looked at. Can it do that, or has it gone beyond its jurisdiction?
  It can. The Supreme Court held that the appellate power under section 251 is not confined to matters the Assessing Officer considered. Following the three-judge decision in Kanpur Coal Syndicate and the three-judge decision in Jute Corporation of India, the first appellate authority has plenary powers, coterminous with those of the Assessing Officer: it may confirm, reduce, enhance or annul the assessment, may do what the Assessing Officer could do, and may direct him to do what he failed to do. The Act places no restriction on that power, so ten further hundi credits of Rs 2,30,000 were properly added.
• Sri Krishna Pvt Ltd v ITO Supreme CourtHelps department
  I disclosed my hundi loans in the return and the officer accepted them. He now says the same lenders were bogus in the next year. Can he reopen?
  Yes. The Supreme Court held that a false disclosure is not a full and true disclosure. Whether a loan shown in the return is genuine is itself a material fact, not an inference to be drawn by the officer, so an assessee who records bogus loans has failed the duty section 147(a) imposes. That the officer could have investigated at the time, and did so in the following year, does not relieve the assessee of that duty. At the notice stage the enquiry is only whether reasonable grounds exist, not whether escapement is proved. The appeals were dismissed with costs.
• Phool Chand Bajrang Lal v ITO Supreme CourtHelps departmentValidity unconfirmed
  I produced my books and a confirmation for the loan at the original assessment. The officer now says he has learnt the lender was a name lender. Can he reopen on that?
  Yes. The Supreme Court dismissed the assessee's appeal and upheld the reopening. Where specific, reliable and relevant information comes into the officer's possession after the assessment, exposing the falsity of what the assessee said, that is not a change of opinion or a fresh inference from the same material - it is acting on fresh information. Producing books and a confirmation letter for a transaction later shown to be bogus is not a true and full disclosure. The officer's failure to investigate the doubt during the original assessment does not take away his jurisdiction. Burlop Dealers was confined to its own facts.
• CIT v Sun Engineering Works (P) Ltd Supreme CourtHelps department
  Since the assessment is open again, can you use the reassessment to raise claims you missed the first time?
  No. Reassessment proceedings are for the benefit of the revenue. You cannot reopen matters concluded in the original assessment, or press claims you failed to make or which were rejected — that would turn the reassessment into an appeal in disguise.
• R.K. Upadhyaya v Shanabhai P. Patel Supreme CourtHelps departmentValidity unconfirmed
  My reassessment notice was posted on the last day of the limitation period but reached me three days later. Is it time barred?
  No. The Supreme Court allowed the Revenue's appeal and vacated the Gujarat High Court's order. Under the 1961 Act a clear distinction is made between issue of a notice and service of it. Section 149 says no notice under section 148 shall be issued after the limitation has lapsed, so once a notice is issued in time jurisdiction vests in the officer. Section 148(1) requires service before the order of assessment is made: the mandate is that reassessment shall not be made until there has been service. Service is therefore a condition precedent to the order, not to jurisdiction. Here the notice went by registered post on 31 March 1970, the last day, and that sufficed.
• P. Jayappan v ITO Supreme CourtHelps department
  The complaint under s.276C and s.277 was filed while my reassessment is still running. Is it premature?
  No. There is no provision that bars a prosecution until reassessment proceedings are completed. The criminal court judges the case on the evidence before it, and an expectation of success in an appeal or reference does not stand in the way of the complaint being instituted.
• Kishinchand Chellaram v CIT Supreme CourtHelps taxpayer
  They have a letter from a bank that you have never seen. Can they use it against you?
  No. Material collected behind your back and relied on against you must be disclosed to you, with an opportunity to meet it. Because the bank's letter was never shown to the assessee, the addition could not stand.
• Indian and Eastern Newspaper Society v CIT Supreme CourtHelps taxpayer
  My assessment is being reopened because an internal audit party told the officer he applied the wrong head of income. Is an audit party's opinion on the law information for reopening?
  No. The Supreme Court held that the opinion of an internal audit party of the Income Tax Department on a point of law is not information within section 147(b). Law, for this purpose, must be created by a formal source - a competent legislature or a competent judicial or quasi-judicial authority - and an audit party performs administrative or executive functions with no power of judicial supervision over the officer's quasi-judicial acts. The part of an audit note that merely points to the law the officer overlooked is information; the part expressing the audit party's own opinion on how that law applies is not, and cannot be taken into account.
• Rajinder Nath v CIT Supreme CourtHelps taxpayer
  An appellate order in my firm's case said the officer is free to assess the amount in the partners' hands. Does that lift the limitation bar for assessing me?
  No. The Supreme Court held that the words finding and direction are limited in meaning. A finding must be one necessary for the disposal of the particular case, of the particular assessee and for the particular year, and directly involved in that disposal; an incidental finding will not do. A direction must be express, necessary for the disposal, and within the power of the authority making it. Saying the officer is free to take action leaves the matter to his discretion and is not a direction at all. Section 153(3)(ii) does not enlarge jurisdiction; it only raises the bar of limitation.
• Parashuram Pottery Works Co Ltd v ITO Supreme CourtHelps taxpayer
  The Income-tax Officer allowed me too much depreciation because he worked it out from his own records and forgot the initial depreciation. Years later he wants to reopen. Is that my failure to disclose?
  No. The Supreme Court quashed notices under section 148 issued more than four years after the assessment years. The mistake was the Income-tax Officer's own: he had computed depreciation from departmental records and overlooked the ceiling that the aggregate of all depreciation cannot exceed original cost. The assessee's duty is to disclose the primary facts fully and truly; it does not extend to telling the officer what inference to draw or instructing him on the law. Nothing in the returns was shown to be incorrect. Without the omission or failure limb, the officer had no jurisdiction beyond four years.
• ITO v Lakhmani Mewal Das Supreme CourtHelps taxpayer
  How strong does the officer's material have to be before he can reopen?
  Strong enough to have a live link with the belief. Material that is vague, indefinite, distant or far-fetched will not do. The statute says reason to believe, not reason to suspect.
• Gemini Leather Stores v ITO Supreme CourtHelps taxpayer
  The Income-tax Officer found my undisclosed drafts during the original assessment, questioned my partner about them, and then did nothing. Can he reopen years later saying I failed to disclose them?
  No. The Supreme Court quashed the notice. The Income-tax Officer had himself discovered the drafts, put them to a partner of the firm, recorded in his best judgment assessment order that the money must belong to the firm, and then failed to bring the amounts to tax. Once he had all the primary facts it was for him to make the enquiries and draw the inferences. His failure to do so was plainly an oversight, and he could not use section 147(a) to remedy an error resulting from his own oversight. Section 143 was cited in the notice; the proceedings were quashed.
• CIT v Gillanders Arbuthnot & Co Ltd Supreme CourtCuts both ways
  I sold shares to a company I control for an agreed price and took the company's own shares, at face value, in satisfaction. Can the officer compute my capital gain on what those shares were really worth?
  No, on these facts. The Supreme Court held that where the transaction is a sale for a price, the full value of the consideration is the price bargained for, not the market value of what was received in satisfaction of it. The agreement said the partners would sell and the company would purchase for Rs 75 lakhs; the clause allotting shares merely provided the mode of satisfying that price. That the firm gained by taking shares issued at face value did not turn the sale into an exchange. Market value can be substituted only where the first proviso applies, and it did not.
• Sheo Nath Singh v Appellate Assistant Commissioner Supreme CourtHelps taxpayer
  The recorded reasons for reopening my assessment say only that I am believed to have made secret profits and believed to have received a large sum. Is that reason to believe?
  No. The Supreme Court quashed the notices. The words reason to believe mean the belief of an honest and reasonable person on reasonable grounds; the officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. He acts without jurisdiction if the reason for his belief does not exist or is not material or relevant to the belief the section requires, and the court can always examine that, though it cannot investigate the sufficiency of the reasons. Here the recorded reasons stated no material fact at all - they were themselves expressed as beliefs, an obvious self-contradiction.
• Chhugamal Rajpal v S.P. Chaliha Supreme CourtHelps taxpayer
  The sanctioning authority just wrote 'yes' and signed. Is that a sanction?
  No. The officer had set out no reason for concluding it was a fit case, and the Commissioner merely noted the word yes and signed beneath it. Neither s.147 nor s.151 was satisfied, so the officer had no jurisdiction.
• CIT v Bhanji Lavji Supreme CourtHelps taxpayer
  I placed all my primary facts before the officer and he dropped the proceedings. Can a later officer reopen the assessment because he takes a different view of those same facts?
  No. The Supreme Court held that once the assessee has fully and truly disclosed the primary facts necessary for assessment, the officer cannot start reassessment on a change of opinion. He may have drawn a wrong legal inference from the disclosed facts, but that does not make him competent to reopen. The burden is also placed where it belongs: if failure to disclose is alleged, it is for the officer to establish it, not for the assessee to prove there was no concealment. The assessee owes no duty to instruct the officer on questions of law, such as that profits were embedded in receipts.
• Baladin Ram v CIT Supreme CourtHelps department
  I made unexplained investments after the close of my accounting year. Which year can the officer tax them in, and can he reopen an earlier year to do it?
  The financial year, and yes he can reopen. The Supreme Court held that where income is found to come from an undisclosed source, for which no accounts are kept and no previous year has been chosen, the only way it can be assessed is as income of the ordinary financial year. So investments of about Rs 27,000 made in the Sarpat and bamboo business between December 1943 and February 1944 fell in the financial year 1943-44 and were assessable for 1944-45, not 1945-46. Disclosing them in the 1945-46 proceedings was no disclosure for 1944-45, so section 34(1)(a) was attracted.
• Calcutta Discount Co Ltd v ITO Supreme CourtHelps taxpayer
  How much am I actually required to disclose — and can they reopen because the officer drew the wrong conclusion?
  You must disclose the primary facts fully and truly. Drawing inferences from those facts is the officer's job. Getting that inference wrong is not your failure and does not justify reopening.
• Biswajit Deb v Union of India High CourtHelps taxpayerValidity unconfirmed
  The recorded reasons admit the AO had no time to verify my transactions. Is the reopening valid?
  No. The Gauhati High Court quashed the s.148 notice on two independent grounds: an officer who records that he could not identify the transactions for want of time has formed no reason to believe, and the s.151 approval was mechanical.
• Genesys International Corporation Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  We claimed s.10AA on our SEZ unit without first setting off the losses of our other units, and the officer now wants to reopen the assessment to undo it. Is that a good reason to reopen?
  No. The Bombay High Court held that the very premise of the reopening - that the s.10AA deduction should have been given only after setting off the losses of the ineligible units - is in the teeth of the Supreme Court's decision in CIT v Yokogawa India Ltd, so it could not found a reason to believe income had escaped. The other two grounds also failed: the six month repatriation condition was introduced only by the Finance Act 2024 and did not apply to assessment year 2017-18, and the fact that the claim was made in the return under 'any other amount allowable as deduction' rather than in the s.10AA schedule was explained by the return utility itself. The notice was quashed as a change of opinion.
• Saurav Chachra v CBDT High CourtHelps taxpayerValidity unconfirmed
  I have a stay on my demand and they still adjusted my refund against it. Can they do that?
  No. The Orissa High Court held that adjustment is a mode of recovery, so setting a refund off against a demand whose recovery is stayed under s.220(6) does indirectly what the stay forbids directly. The refund was ordered released with s.244A interest within four weeks.
• Sanjay Kumar Bijay Kumar v PCIT High CourtHelps taxpayerValidity unconfirmed
  The same cash deposits were already reassessed and accepted at nil. Can they reopen them again?
  No. The Orissa High Court held that where an earlier s.147 proceeding examined these very deposits, found them disclosed and assessed at NIL, and that order went unchallenged, a second reassessment on identical material is a change of opinion and an impermissible review.
• Sapphire Foods India Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  The officer has reopened my scrutiny assessment because the audit party disagreed with what he allowed. Is that a fresh look or a change of opinion?
  On this decision, a change of opinion. Where the Assessing Officer had all the relevant material during the original scrutiny assessment, a reassessment driven by an audit objection on that same material is an impermissible review, and reopening on the same material is not permitted. The Court also held the notice barred by limitation because the extended period was unavailable in the absence of a failure to disclose material facts.
• PCIT v Rajesh Suresh Chopra High CourtHelps taxpayerValidity unconfirmed
  If an estimate on the disputed purchases cannot be avoided, is there a High Court figure I can point to?
  Yes, on these facts. The Gujarat High Court dismissed the department's appeal against a Tribunal order that had confined the addition on roughly Rs 116.50 crore of alleged accommodation-entry purchases to 6 per cent, holding that no substantial question of law arose because the questions proposed were already answered by a coordinate bench, which had held 6 per cent of bogus purchases to be fair and reasonable. It is a percentage a High Court has let stand, not a rule — the figure follows the facts, and the department's contrary line on whole-invoice additions is unaffected.
• PCIT v Drisha Impex (P) Ltd High CourtHelps department
  The Tribunal gave me a small percentage addition on disputed purchases. Can the department get the whole disallowance back on appeal?
  Yes, where the file is empty. The Bombay High Court set aside the Tribunal's 3% estimate and restored the Assessing Officer's disallowance of the whole of the disputed purchases under s.69C, and the assessee's SLP was dismissed. What decided it was a list of documents that were not produced: no evidence of actual delivery of material, no supplier confirmations, no audited accounts, no quantitative details and no correlation between the purchases and the sales.
• PCIT v Kanak Impex (India) Ltd High CourtHelps department
  The officer says my purchases are accommodation entries. Can he add the whole purchase, or only a percentage?
  The whole of it, if you cannot show the purchases were real. The Bombay High Court set aside the Tribunal's order restricting the addition to a 12.5% profit estimate and restored the Assessing Officer's disallowance of the entire Rs 20.06 crore under s.69C, and the Supreme Court dismissed the assessee's SLP. The profit-element line only runs where the purchases themselves are accepted as having happened.
• Sonansh Creations P Ltd v ACIT High CourtHelps taxpayerValidity unconfirmed
  The officer says I took accommodation entries and I say I received nothing. Must he have material that the entries exist before he reopens?
  He must. The Delhi High Court set aside a s.148A(d) order and the consequent notice where the information was that eleven entities controlled by an entry operator had given the company fictitious loans, the company denied receiving anything from them and disclosed the bank accounts it operated, and the officer never referred to any material showing that the money had in fact come into those accounts. The Court rejected the contention that at the s.148A(d) stage the officer need form no opinion on the genuineness or veracity of the information; he must be reasonably certain that the alleged entries exist, though he need not conclusively decide that they are accommodation entries. Liberty was reserved to issue a fresh notice if material is found.
• Hexaware Technologies Ltd v ACIT High CourtHelps taxpayerPartly overruled — read this first
  Your s.148 notice came from your own local officer, not from the faceless unit. Does that matter?
  In Bombay, yes. After the CBDT scheme notified under s.151A on 29 March 2022, only a Faceless Assessing Officer acting through automated allocation can issue a reassessment notice. There is no concurrent jurisdiction, and a notice from the jurisdictional officer was quashed.
• Champa Impex P Ltd v Union of India High CourtHelps departmentValidity unconfirmed
  The AO made no enquiry before issuing my 148A(b) notice. Does that kill the reopening?
  No, on the Calcutta view. The Division Bench read the words 'if required' in s.148A(a) as giving the Assessing Officer a discretion, so the absence of a prior enquiry does not by itself vitiate the notice.
• Sevensea Vincom P Ltd v PCIT High CourtHelps taxpayerValidity unconfirmed
  They reopened AY 2016-17 in 2022 for under Rs 50 lakh. Is the notice time-barred?
  Yes. The Jharkhand High Court held the three-year period for AY 2016-17 ended on 31 March 2020, and because the Department itself alleged escapement of only Rs. 39,21,450 the extended ten-year window in s.149(1)(b) was unavailable. The whole proceeding was without jurisdiction.
• Meet Lalwani v ITO High CourtHelps taxpayer
  I filed the death certificate and they still issued the 148 notice in my mother's name. Is it valid?
  No. The Madhya Pradesh High Court quashed the s.148 notice and the s.148A(d) order. Once the Department knew of the death, issuing the notice in the deceased's name was a failure to acquire jurisdiction, and ss.292B, 292BB and 159 do not cure it.
• Chotanagpur Diocesan Trust v Union of India High CourtHelps taxpayerValidity unconfirmed
  My 148A(b) notice describes an enquiry but nothing was attached. Can I insist on the material?
  Yes. The Jharkhand High Court held the Department is duty-bound and mandatorily required to supply all material information, the enquiry conducted and the supporting documents along with the s.148A(b) notice; a three-page narration with no enclosures does not discharge that obligation.
• PCIT v Indravadan Jain, HUF High CourtHelps taxpayerHigh Courts differ
  SEBI has found that the broker rigged the price of the scrip I sold. Does that finding by itself make my capital gain bogus?
  No. The Bombay High Court dismissed the Revenue's appeal where the shares had been bought on the floor of the Kolkata Stock Exchange through a registered broker, paid for by cheque, held in demat for more than a year and sold on the floor of the exchange with contract notes and bills produced and the sale proceeds received from the exchange. The Assessing Officer's case was that the scrip was a penny stock, that the broker had been found by SEBI to have manipulated the price through synchronised cross-deals, and that the price had gone from Rs. 3.12 to Rs. 155.04 in two years. That was held not to be enough, because the price manipulation was the broker's conduct and nothing connected the assessee to it.
• Blackstone Capital Partners Singapore VI v ACIT High CourtHelps taxpayerUnder appeal
  I hold a valid TRC. Can the AO go behind it and reopen my assessment for lack of substance?
  No. A valid tax residency certificate is statutorily the only evidence required to be eligible for treaty benefit, and the Indian authorities cannot disregard a certificate issued by another State's tax authority. Since Article 13(4) of the India-Singapore treaty then protected the capital gains, no income chargeable to tax had escaped assessment and the s.148 notice was invalidated.
• Dr Mathew Cherian v ACIT High CourtHelps taxpayer
  I'm a consultant doctor at a hospital. Can the AO reopen and tax my fees as salary?
  Not on this material. The Madras High Court set aside the s.148A(d) order and s.148 notice: the contracts showed professional autonomy, a variable fee tied to patient volume, no statutory employment benefits and freedom to practise privately, so there was no information suggesting escapement of income.
• Susai Amalanathan Antoni Vincent v Income Tax Officer High CourtHelps department
  The section 148A order does not say the information came from the Risk Management Strategy or an audit objection. Does that make the reassessment bad for want of jurisdiction?
  No. The Madras High Court held that the Risk Management Strategy is merely a phrase for an evolving departmental strategy covering all the sources from which information may be collated, and no limitation should be placed on it. The Board's circulars of 10 and 13 December 2021 list many permissible sources, and the Court held there can be no fetters on an Assessing Officer's power to gather information on which reassessment may be initiated. Here the officer had referred to information from the Director of Income Tax (Investigation and Criminal Intelligence), which sufficed for section 148A. The Rs 50 lakh condition in section 149(1)(b) was satisfied on the sale of 19 plots for Rs 1,50,25,585, and sanction under section 151 had been obtained. The petition was dismissed.
• Parmesh Chand Yadav v ITO High CourtHelps departmentSuperseded by amendment
  The AO has issued a s.148A notice on crypto exchange data showing Rs 4.65 crore of transactions. I have given my bank statements and my return — is that enough to stop the s.148 notice?
  No, not on these facts. The Court held that bank statements alone do not verify what the crypto transactions were, that the assessee ought to have produced the crypto currency ledger, and that the officer's brief consideration of the reply satisfied s.148A. The writ against the s.148 notice failed, with liberty to produce the ledger in the reassessment itself.
• Divya Capital One Private Limited v ACIT High CourtHelps taxpayer
  The section 148A(b) notice just lists my own turnover from Form 10DB, GST and TDS data and calls it escaped income, and the officer passed the 148A(d) order without my detailed reply. Can I get it set aside?
  Yes. The Delhi High Court quashed the section 148A(d) order and the section 148 notice and remanded the matter for a fresh reasoned order within eight weeks. Classifying a fact already on record as 'information' may let the officer issue a notice under section 148A(b), but it does not let him issue a reassessment notice under section 148. The notice and order were cryptic, the underlying material was never shared, no reasonable time was given, and the detailed reply on record was not considered, which breaches the mandate of section 148A(c). The Court directed that its order be sent to the CBDT.
• Daujee Abhushan Bhandar P Ltd v UOI High CourtHelps taxpayer
  The s.148 notice was digitally signed on 31 March but the e-mail only went on 6 April. Was it issued in time?
  No. Signing a notice and issuing it are different acts. A digitally signed notice is an electronic record, and by s.13(1) of the Information Technology Act, 2000 its despatch occurs when it enters a computer resource outside the control of the originator. The notice here was issued on 6 April 2021, after the period in s.149 had run, and was quashed.
• Mon Mohan Kohli v ACIT High CourtHelps taxpayerValidity unconfirmed
  I got a section 148 notice after 1 April 2021 under the old reassessment provisions. Could the department still use them because of the COVID relaxation notifications?
  No, on this decision. The Delhi High Court held that the substitution of sections 147 to 151 by the Finance Act 2021 repealed the old provisions and replaced them, and that the Explanations in the notifications of 31 March 2021 and 27 April 2021, purporting to keep the old procedure alive until 30 June 2021, could not do so. Section 3(1) of the relaxation Act allows the Central Government to extend time limits and no more; a delegated legislation cannot vary the date on which Parliament's provisions take effect. Section 6 of the General Clauses Act does not save the old notices, because the new Act manifests an intention to destroy the old procedure.
• Brahm Datt v ACIT High CourtHelps taxpayer
  The Department wants to reopen a 1998-99 assessment in 2015 using the sixteen-year limit for foreign assets brought in from July 2012. Limitation for that year ran out in 2005. Can they?
  No. The Delhi High Court quashed the section 148 notice and all consequent proceedings. Limitation for assessment year 1998-99 expired on 31 March 2005 under section 149 as it then stood, six years from the end of the assessment year. The sixteen-year period in section 149(1)(c), inserted by the Finance Act 2012 with effect from 1 July 2012, could not revive an assessment that had already become final more than eight years earlier. Applying K.M. Sharma and S.S. Gadgil, an amendment extending limitation is not to be read as reviving proceedings already barred, absent express words or necessary implication.
• M/s. Indira Industries v Principal Commissioner of Income Tax High CourtHelps taxpayer
  The Commissioner has issued a section 263 notice raising issues the reassessment never touched. Does the two-year limit run from the reassessment order or from the original assessment, and can I challenge the notice itself?
  From the original assessment, and yes. The Madras High Court held that where a section 263 notice raises issues that were not the subject matter of the reassessment, the two years in section 263(2) run from the end of the financial year in which the original assessment was passed, not the reassessment. Here scrutiny assessment was made on 25 February 2015, so time ran from 31 March 2015, and the notice of 16 August 2017 was out of time. Being barred by law, the notice suffered from lack of jurisdiction, and the settled principles allow a show cause notice to be assailed on that ground. The writ appeal was allowed and the notice quashed.
• Sabh Infrastructure Ltd v ACIT High CourtHelps taxpayer
  My scrutiny assessment is being reopened after four years on an entry operator's statement that my share subscribers were paper companies, but I had filed all their details during the assessment. Can the notice stand?
  No. The Delhi High Court quashed the section 148 notice and the order disposing of the objections. The reasons named the same five subscriber companies whose details, confirmations, returns and balance sheets the assessee had filed during the section 143(3) assessment, and disclosed no new material and no fact the assessee had withheld. An allegation that companies are paper companies, without further facts and without any enquiry connecting the entry operator's statement to them, is not enough to reopen a completed assessment after four years. The Court also laid down four guidelines the Revenue is to follow in reopening cases.
• PCIT v RMG Polyvinyl (I) Ltd High CourtHelps taxpayerValidity unconfirmed
  My reassessment notice says I never filed a return and gets the amount wrong. Does that make the reopening bad?
  Yes, on these facts. The Delhi High Court dismissed the Revenue's appeal, holding that no error had been committed by the Tribunal in finding the reopening under section 147 bad in law. The reasons recorded contained two glaring errors: the Assessing Officer proceeded on the footing that no return had been filed when one had been filed and processed under section 143(1), and put the accommodation entries at Rs 1.56 crore when the correct figure on his own assessment order was Rs 78 lakh. That showed a failure of application of mind, and the Court could not discern the link between the tangible material and the formation of the reasons to believe.
• PCIT v Meenakshi Overseas Pvt Ltd High CourtHelps taxpayerSuperseded by amendment
  The reasons recorded just repeat what the Investigation Wing said. Is that enough to reopen?
  No. The satisfaction that s.147 requires is the Assessing Officer's own and cannot be borrowed. Reasons that reproduce another authority's conclusions, without showing the link from tangible material to the belief, do not sustain a reopening.
• Deepak Extrusions P Ltd v DCIT High CourtHelps taxpayerValidity unconfirmed
  The Addl. CIT gave the AO a s.144A direction. Does that let him skip a speaking order on my objections?
  No. The Assessing Officer must dispose of objections to the reopening by a reasoned, speaking order before framing the assessment, and a general s.144A direction to pass an appropriate order after giving adequate opportunity does not displace that obligation. The assessment was quashed.
• PCIT v N.C. Cables Ltd High CourtHelps taxpayerValidity unconfirmed
  The sanction for my reassessment notice is just the word approved on the file. Is that enough under section 151?
  No. The Delhi High Court held that section 151 requires the competent authority to apply his mind and form an opinion, and that the mere appending of the expression approved says nothing. He need not record elaborate reasons, but satisfaction must be recorded, which can be reflected in the briefest possible manner; here the exercise was ritualistic and formal rather than meaningful, which defeats the rationale of the safeguard of approval by a higher ranking officer. The Court also upheld the concurrent findings that the Assessing Officer had made only a perfunctory inquiry before adding Rs 1.35 crore under section 68. Both questions were answered in the assessee's favour.
• PCIT v G&G Pharma India Ltd High CourtHelps taxpayer
  My assessment was reopened on an accommodation entry list from the Investigation Wing. The reasons just list the entries and conclude I routed my own money. Is that a valid reopening?
  No. The Delhi High Court held that the Assessing Officer must apply his mind to the material and form his own prima facie opinion before issuing a notice under section 148. Reasons that set out four entries received from the Investigation Wing and then jump straight to the conclusion that the company had introduced its own unaccounted money, without saying what the material was or how the entries appeared in the accounts, do not meet the jurisdictional requirement of section 147. The Court also held that the Commissioner (Appeals) analysing the material afterwards is a post mortem exercise that cannot save a defective reopening. Appeal dismissed.
• CIT v Chetan Gupta High CourtHelps taxpayer
  The section 148 notice was served on somebody at my old business premises, not on me. My accountant then wrote in objecting. Is the reassessment good?
  No. The Delhi High Court held that issue and service of the section 148 notice on the assessee, or on an agent he has empowered in writing to receive it, are jurisdictional requirements, not procedure. Service on an accountant at premises the assessee had not given as his address, whose authority the Revenue could not establish, was no service. Objecting through chartered accountants and taking part in the proceedings is not a waiver. Section 292BB is prospective from 1 April 2008 and, since the assessee objected before the reassessment was completed, its proviso applies anyway. The reassessment was quashed.
• CIT v Navodaya Castles (P) Ltd High CourtHelps departmentValidity unconfirmed
  I have produced the share subscribers' incorporation certificates, PAN cards, bank statements and confirmations — is that enough to discharge my onus under section 68?
  Not necessarily. The Delhi High Court held that certificates of incorporation and PAN establish existence on paper but have their limitation where there is material showing the subscriber was a paper company and not a genuine investor. Identity, creditworthiness and genuineness must be tested in depth, having regard to human probabilities and the normal course of human conduct, not superficially. Creditworthiness is not proved by a cheque or a bank statement where the account merely shows cash deposited and cheques issued out. The Tribunal's order upholding deletion of a Rs 54 lakh addition was set aside and the matter remitted for fresh decision.
• Aroni Commercials Ltd v DCIT High CourtHelps taxpayer
  The Assessing Officer asked about my share gains during scrutiny, I answered, and the assessment order says nothing about it. Can he now reopen and call the gains business income?
  No. The Bombay High Court quashed the section 148 notice. Once a query is raised in scrutiny and the assessee answers it, the issue was considered by the Assessing Officer, even if the assessment order is silent on it. Reopening on the same issue is therefore a change of opinion and outside sections 147 and 148. The Court also held that an internal audit report which only draws a different inference from accounts already on record is not tangible material. The reassessment order passed while the writ was pending was set aside as well.
• DIT v Jyoti Foundation High CourtHelps taxpayerValidity unconfirmed
  The Commissioner says the Assessing Officer's inquiry was not deep enough. Can he set the assessment aside and tell the officer to inquire further?
  No. Where inquiry was made but the Commissioner thinks it insufficient, the Commissioner must conduct the inquiry himself and record a finding that the order is erroneous. He cannot remit the question of whether the order is erroneous to the Assessing Officer.
• CIT v Usha International Ltd High CourtCuts both waysValidity unconfirmed
  I disclosed everything in a scrutiny assessment, the Assessing Officer never asked about one particular item, and now he wants to reopen within four years — is that a change of opinion?
  It depends on what happened at the original assessment. The Delhi High Court Full Bench, on 21 September 2012, took up four referred questions on the meaning of change of opinion under section 147 after the 1989 amendment. Two propositions are settled on the face of the judgment. Where the return was only processed under section 143(1) and no scrutiny assessment was made, there is no opinion and so no change of opinion. Where the assessment order itself records that the issue was raised and decided for the assessee, reopening is barred. The hard case — full disclosure, a section 143(3) assessment, but silence in the order — is where the Bench divided.
• General Motors India Pvt Ltd v DCIT High CourtHelps taxpayer
  My client has unabsorbed depreciation from the late 1990s that the officer says died after eight years. Can it still be carried forward?
  Yes, if it was still unabsorbed on 1 April 2002. The Gujarat High Court held that unabsorbed depreciation available to an assessee on that date is governed by s.32(2) as substituted by the Finance Act, 2001, which carries no eight-year cap, and not by the eight-year regime introduced by the Finance (No. 2) Act, 1996 — so depreciation unabsorbed for assessment years 1997-98 to 2001-02 carries forward until it is set off.
• CIT v Anil Kumar Bhatia High CourtHelps departmentValidity unconfirmed
  I was searched, and my earlier returns had only been processed under section 143(1). Can the Assessing Officer reopen all six years under section 153A and add things that have nothing to do with the search?
  Yes, section 153A is validly invoked. The Delhi High Court held the Tribunal was wrong to say section 153A cannot be used where the six years' returns had only been processed under section 143(1). Section 153A opens with a non obstante clause that removes the fetters of sections 147, 148, 149, 151 and 153, and it empowers the Assessing Officer to assess or reassess the total income - disclosed and undisclosed - for each of the six years. Pending proceedings abate; completed ones do not, and are simply reopened. The Court expressly left open what happens where no incriminating material at all is found.
• CIT v SPL's Siddhartha Ltd High CourtHelps taxpayer
  My reopening notice was sanctioned by the Commissioner instead of the Joint Commissioner. Does approval by a more senior officer cure the defect?
  No. The Delhi High Court held that where section 151 names the Joint Commissioner as the authority to be satisfied, sanction by the Commissioner is not compliance, even though he is senior. The file here was routed through the Additional Commissioner, but he merely endorsed "CIT may kindly accord sanction" and applied no mind of his own. The Court held this was not an irregularity curable under section 292B. Where a statute requires a thing to be done in a certain manner it must be done in that manner alone, and the satisfaction of one authority cannot be substituted by that of another. The Revenue's appeal was dismissed.
• Signature Hotels (P) Ltd v ITO High CourtHelps taxpayer
  The only material behind my reopening notice is a one-line entry in an Investigation Wing annexure naming me as the beneficiary of an accommodation entry. Is that enough?
  No. The Delhi High Court quashed the section 148 proceedings. The reasons referred to nothing but an annexure listing a Rs.5 lakh cheque received on 9 October 2002 from Swetu Stone PV, with a bank and account number. That annexure is not material or evidence establishing a nexus with escapement of income and is not even a pointer to it. The Assessing Officer had not applied his own mind to the information or examined its basis, and the Commissioner had given approval mechanically. The share applicant was an existing incorporated company with a permanent account number, and the entry operators' statements did not name the petitioner.
• Ranbaxy Laboratories Ltd v CIT High CourtHelps taxpayerValidity unconfirmed
  Same point, in Delhi: if the recorded grounds fail, can the officer still tax an unrelated item?
  No. Once the officer accepts that the recorded items did not escape assessment, it means he had no reason to believe, and the notice becomes invalid. Every new issue needs a fresh s.148 notice.
• Sarthak Securities Co Pvt Ltd v ITO High CourtHelps taxpayer
  The Assessing Officer has reopened my assessment purely on an investigation wing list saying my share application money was an accommodation entry. Can I get the notice quashed?
  Yes, on these facts. The Delhi High Court quashed the section 147 proceedings and the section 148 notice. The recorded reasons reproduced the investigation wing's information and nothing more; neither the reasons nor the order rejecting objections showed any independent application of mind by the Assessing Officer. The four investor companies were named, their existence was not disputed, they had bank accounts and paid through banking channels - all of which the Assessing Officer knew from the outset. On those facts Lovely Exports applied squarely, and the Court held it would be unwarranted to make the assessee go through the whole gamut of reassessment proceedings.
• Kanubhai M Patel HUF v Hiren Bhatt High CourtHelps taxpayer
  My s.148 notice is dated 31 March but the post office booked it on 7 April. Which date does s.149 test?
  The date it went to the post office. To issue means to send out, to place in the hands of the proper officer for service; merely signing the notice on 31 March cannot be equated with issuing it. The date of issue was therefore 7 April 2010, beyond the six years available for assessment year 2003-04, and the notices went.
• CIT v Jet Airways (I) Ltd High CourtHelps taxpayer
  The officer dropped the very issue he reopened for, then taxed something else instead. Is that allowed?
  No. If no addition is made on the ground for which the notice was issued, the officer cannot independently go on to assess some other income under s.147. Explanation 3 does not override the substantive part of the section.
• Haryana Acrylic Manufacturing Co v CIT High CourtHelps taxpayerValidity unconfirmed
  The reopening notice came after four years and the recorded reasons say nothing about my failing to disclose material facts. Is that fatal, and does it matter that the reasons reached me a year later?
  Both points went in the assessee's favour. The Delhi High Court quashed the section 148 notice, the order rejecting objections and all proceedings under them. Where the proviso to section 147 applies, the reasons must themselves allege failure to disclose fully and truly all material facts; the reasons supplied here contained no such allegation, and a differently worded form produced later with the counter-affidavit could not be substituted for them. The Court also held that reasons must be furnished within the six year outer limit in section 149, since the notice and the communication of reasons go hand in hand. On the merits the assessee had disclosed everything the officer asked for.
• German Remedies Ltd v DCIT High CourtHelps taxpayer
  My scrutiny assessment is being reopened more than four years later, and the Commissioner signed the section 151 approval the same day the file reached him. Can I have the notice quashed?
  Yes. The Bombay High Court quashed the section 148 notices and the orders rejecting the objections. Three things were fatal. The recorded reasons were unsustainable: the tax deduction details were on record in Form No.27 and in the tax audit report, and the closing stock valuation had already been examined in the original assessment. Reopening beyond four years without alleging any failure to disclose fully and truly cannot stand. And the approval under section 151 showed non-application of mind - the Assessing Officer carried the file to the Commissioner and approval was granted the same day, in his presence, without considering either the four-year bar or whether there had been any failure to disclose.
• Hindustan Lever Ltd v R.B. Wadkar High CourtHelps taxpayerValidity unconfirmed
  My assessment is being reopened after four years, but the recorded reasons never say I failed to disclose anything. Can the Department make that case in its affidavit at the hearing?
  No. The Bombay High Court quashed the section 148 notice. Where a scrutiny assessment under section 143(3) has been made, the proviso to section 147 bars action after four years from the end of the assessment year unless income escaped by reason of the assessee's failure to disclose fully and truly all material facts. The reasons here said nothing about any such failure. The Court held that reasons must be read as recorded, with no substitution, deletion, addition or inference, and cannot be supplemented by an affidavit or an oral submission. The officer therefore had no jurisdiction, and the notice fell on that short ground alone.
• CIT v Sardari Lal & Co High CourtHelps taxpayerValidity unconfirmed
  Can the CIT(A) enhance my assessment by taxing a source the AO never looked at?
  No. The power of enhancement is confined to the subject matter of the assessment under appeal — the items the AO considered, expressly or by necessary implication. A new source has to be brought to tax by reassessment or by revision, each of which carries its own safeguards and time limits.
• L.R. Gupta v Union of India High CourtHelps taxpayer
  I did not return a receipt because I believe it is not taxable yet. Can the Department search me on the footing that I have undisclosed income?
  No, not on that basis alone. The Delhi High Court quashed a search authorisation and everything done under it. Undisclosed income means income liable to tax which the assessee has kept back in an effort to escape assessment, knowing it to be taxable. A failure to file a return or to disclose what the Department believes is taxable is not enough. The satisfaction note said only that the family had not been disclosing their true income and wealth, which answers neither clause (b) nor clause (c) of section 132(1). The cash, jewellery and documents seized were ordered returned within two weeks.
• CIT v Union Tyres High CourtCuts both ways
  If the CIT(A) spots an untaxed source of income, what is the correct route to bring it to tax?
  The Delhi High Court held that the first appellate authority cannot use the enhancement power to reach a source of income the Assessing Officer never considered. Where such a source surfaces, the statutory route is reassessment under s.147/148 or revision under s.263, not enhancement in the pending appeal.
• Cyberstar Infocom LLP v ITO ITATHelps taxpayer
  My company became an LLP and I told the officer, but he still issued the notice and passed the assessment in the old company's name. Is that just a clerical slip he can correct?
  No. The Bangalore Tribunal quashed the assessments as void ab initio. The company converted to an LLP on 27 April 2018 and the LLP wrote to the Assessing Officer on 31 May 2018 enclosing the Ministry of Corporate Affairs certificate and asking him to take the change of status on record. He nonetheless issued the section 143(2) notices and passed the orders under section 143(3) read with section 147 in the name of the company. Following Maruti Suzuki, the Tribunal held that an assessment in the name of a non-existent entity is a substantive illegality and not a defect curable under section 292B.
• Diach Chemicals and Pigments P Ltd v DCIT ITATHelps taxpayerValidity unconfirmed
  The department says my purchases are bogus. Do the suppliers' returns and the input credit allowed on those invoices count for anything in the income-tax assessment?
  They are part of the record, but they are not what carried this case. The addition was deleted on a much wider evidentiary base: notices the Assessing Officer himself issued under s.133(6) came back with direct confirmations from every supplier, the primary documents were complete, the books had been audited four ways with no defect pointed out, and actual production marginally exceeded the standard yield, so the raw material bought had demonstrably gone into the goods sold. The suppliers' returns and the input credit allowed on the purchases sit in that list of supporting facts; the operative paragraph rests on the addition being estimation and surmise with no substantive basis, and does not mention them.
• ACIT v JD Ispat Pvt Ltd ITATHelps taxpayerValidity unconfirmed
  Same point, at Tribunal level: can taking part in a reassessment cure a missing s.143(2) notice?
  No. Section 292BB cures defects in service of notice but does not cure the complete absence of the notice. The reassessment was quashed and a Rs 2.33 crore s.68 addition went with it.
• DCIT v ACE Infracity Developers P Ltd ITATHelps taxpayer
  My lenders are NBFCs that make hundreds of loans. How much of their own affairs do I have to prove?
  Not their internal affairs. Where the lender is a non-banking finance company and lending is its regular business, identity is not in doubt, and creditworthiness is tested against its share capital, reserves and long-term advances rather than its turnover for the year. Allegations that the lender's directors were dummies do not touch the borrower unless the borrower is shown to be connected to them.
• ITO v Ratna Aggarwal ITATHelps taxpayerValidity unconfirmed
  Property came to me under a family settlement but the instrument was a gift deed. Is that taxable under s.56(2)?
  No, on these facts, but the decision is narrower than it reads. The first appellate authority had held that the gift deed merely culminated a family settlement and so was not a transfer within s.2(47), and the Tribunal declined to disturb that. Its own route was different: it held that the exclusion for property received from a relative applies, the definition of relative for a Hindu undivided family being any member of it, and found the settlement to be between members of a family with antecedent rights in the property. That finding was admitted as settled because the Assessing Officer had never disputed it, not because the Tribunal examined it. An addition of Rs. 3,03,43,440 was deleted.
• Ankit Gems (P) Ltd v ITO ITATHelps taxpayerValidity unconfirmed
  The officer says I took accommodation entries from a party I have never dealt with. What do I actually have to do?
  Show that the purchases are not in your books, and the burden goes back to the officer. A s.69C addition of Rs. 38,68,049 was deleted where the purchase register - covering both the firm and the company that succeeded it during the year - recorded no purchase at all from the concern named in the information from a search on a third-party group. Applying K.P. Varghese, the onus of establishing that the conditions of taxability are fulfilled is always on the Revenue, and an assessee cannot be called upon to prove a negative. The first appellate authority had himself recorded that the register showed no such purchase and had then sustained the addition on a theory of his own.
• Gokulakrishna v DCIT (ITAT Chennai) ITATHelps taxpayerValidity unconfirmed
  A new partner came into an LLP, my profit share fell and an amount was credited to my current account. Am I taxable on it?
  On this order, for a pre-2021 year, no. The Chennai Tribunal held that where an existing partner does not retire but simply sees his profit-sharing ratio reduced on the admission of a new partner, there is no transfer under s.2(47), because during the subsistence of the firm a partner has no defined share in its assets and nothing is relinquished. The Tribunal also held that the revaluation of the LLP's assets, credited to partners' accounts before the new partner came in, did not by itself give rise to capital gains. It recorded expressly that s.9B and the substituted s.45(4) are prospective and had no application to assessment year 2017-18.
• ITO v Ketaben Janakbhai Patel ITATHelps taxpayer
  The Assessing Officer has adopted the jantri value for my land sale because a co-owner's assessment used it, even though I objected that the title was defective. Must he refer the valuation to the DVO instead?
  Yes. The Ahmedabad Tribunal held that once the assessee objects that the stamp duty value exceeds the fair market value, the Assessing Officer is duty bound to refer the valuation to the Departmental Valuation Officer under section 50C(2). He cannot adopt the jantri value simply because the officer assessing a co-owner did so. Here the assessee had raised serious objections about defective and disputed title, and the officer knew of them. The Commissioner (Appeals) was right to delete the addition made by substituting the jantri value of Rs 4,98,83,550 for the DVO's earlier valuation of Rs 3,17,86,000, and the Revenue's appeal was dismissed.
• Haresh Ghanshyamdas Makhija v ITO ITATHelps taxpayer
  They already penalised me under 271A for keeping no books. Can they levy 271B on top?
  No. Once penalty has been levied under s.271A for non-maintenance of books, a further penalty under s.271B for failure to audit those books cannot stand — the department cannot assert a failure to audit books it has itself found not to exist. The same consolidated order deletes a separate concealment penalty under s.271(1)(c) on the footing that the officer accepted the return and assessed the identical income, so there was nothing concealed.
• Bangiya Gramin Vikash Bank v ACIT ITATHelps taxpayerValidity unconfirmed
  Five regional rural banks were merged into our bank by a Central Government notification. The officer says s.72AA is only for banking companies and that s.72AB for cooperative societies only came in from assessment year 2008-09, so the merged banks' accumulated losses die. Is there any authority the other way?
  Yes, at Tribunal level. The Kolkata Bench held that the case fell under s.72AA because the assessee is a banking company doing the business of banking and the amalgamation of the five rural banks was brought into force under the directions of the Central Government by gazette notification, and allowed the set-off of the accumulated losses of the merged banks. The set-offs allowed were Rs. 352,68,36,000 for assessment year 2007-08 and Rs. 205,51,01,000 for assessment year 2008-09.
• Pankil Garg v PCIT ITATHelps taxpayer
  I received money from my HUF. Is it taxable because an HUF is not my 'relative'?
  No. A sum received by a member from his HUF, even out of its capital or estate, is a capital receipt in his hands and not income, and s.10(2) was also available. The s.263 revision built on the contrary view was set aside.
• ACIT v Monarch Innovative Technologies Pvt Ltd ITATHelps taxpayer
  I filed my return on time but only claimed the section 80-IC deduction in a revised return. Does section 80AC kill the claim, and can the officer reopen an assessment in which he already allowed it?
  No on both counts, on these facts. The Mumbai Tribunal held that section 80AC requires only that the return be furnished on or before the due date under section 139(1); it does not say the deduction must itself be claimed in that return, and words cannot be read into a taxing statute that the legislature has not used. A revised return under section 139(5) filed in time is an extension of the original return. The reopening was also bad: all the material, including the revised return, the revised tax audit report and Form 10CCB, was before the officer when he allowed the deduction after detailed discussion, so this was a change of opinion. The Revenue's appeal was dismissed.
• Motorola Inc v DCIT ITATHelps taxpayerValidity unconfirmed
  The Assessing Officer issued me a notice under section 142(1) calling for a return after the assessment year had already ended. Is the assessment made on that notice valid?
  No. The Delhi Special Bench held that a notice under section 142(1)(i) calling for a return cannot be issued after the end of the relevant assessment year. Where no return has been filed and the year has closed, the case is one of escaped assessment and the Assessing Officer must proceed under section 148 after satisfying section 147 - recording reasons and forming a reason to believe. Allowing him to call for a return under section 142(1)(i) instead would let those requirements be sidestepped, and the two provisions cannot operate in the same field at the same time. The notices in Motorola's and Ericsson's cases were issued after the year ended, so those assessments were invalid.
• e-Verification Instruction 2(i) of 2024 CBDT Circulars & InstructionsCuts both waysValidity unconfirmed
  A compliance campaign message arrived and nothing was done about it. What does the department do next, and does an updated return filed late in the day count for anything?
  It becomes a reopening, and yes, the updated return is credited against the figure. The Directorate of Income Tax (Systems) tells officers that what the e-Verification machinery hands them is "Information" within the statutory list, that they are to invoke s.147 and issue the s.148 notice in those cases, and that the case will sit in one of two buckets - no updated return filed, or an updated return filed during the verification without fully reconciling the mismatch. In the second bucket the amount treated as escaping is reduced by the additional income the assessee has actually shown. Two things must be said on the face of this. The instrument is an internal communication of the Directorate of Income Tax (Systems) which does not appear to have been published as departmental material and could not be traced in a subscription research database; the copy relied on here comes from an unofficial host. And nothing in it dispenses with the s.148A stage.
• Siemens Financial Services Pvt Ltd v DCIT High CourtHelps taxpayerOverruled
  Beyond three years, who has to approve the reopening — and what if the wrong officer signed?
  Beyond three years the sanction must come from the authority in s.151(ii). Approval by the Principal Commissioner under s.151(i) is no approval at all, and the s.148A(d) order and s.148 notice built on it were quashed.

Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.